CPI Remains Stubbornly High as Yellen's "Noise" Won't Go Away

Consumer Price Inflation was 2.1% in June (as expected) remaining above the Fed's mandate levels and worryingly for all those who see the Fed as omniscient... refusing to go "noisily" down. Core CPI fell very modestly to 1.9% year-over-year but the jump in gasoline prices accounted for two-thirds of the overall rise in June CPI (seems like the Fed needs to print some more world peace to brings prices down). How many months of 'high' inflation does it take before Yellen admits it is not 'noise'?


According to the BLS reports, "In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase. Other energy indexes were mixed, with the electricity index rising, but the indexes for natural gas and fuel oil declining. The food index decelerated in June, rising only slightly, with the food at home index flat after recent increases." Supposedly this is great news for those who don't have to pay for gas. Below is the chart of gasoline CPI on a sequential basis.

Still, for those who face inflation in all its forms, the monthly price increase in June was certainly notable, and can be seen on the chart below.


On a year over year basis, the overall CPI remains rather "noisy":


Inflation broken down by its components:

Finally, the full commentary from the BLS:


The food index rose 0.1 percent in June; this compares to a 0.5 percent increase in May and is its smallest monthly increase since January. The index for food at home was unchanged in June after increasing 2.2 percent over the first five months of the year. Major grocery store food groups were mixed in June. The index for dairy and related products turned down in June, falling 0.4 percent after rising in each of the previous seven months. The fruits and vegetables index also  turned down, falling 0.3 percent after a 1.1 percent increase in May. The index for cereals and bakery products fell for the second month in a row, declining 0.2 percent. In contrast to these declines, the index for meats, poultry, fish, and eggs increased in June, though its 0.2 percent increase was its smallest since  December. The index for other food at home increased 0.1 percent in June, while the index for nonalcoholic beverages was unchanged. The index for food at home has increased 2.4 percent over the past year, with the index for meats, poultry, fish, and eggs up 7.5 percent, but the indexes for nonalcoholic beverages and for cereals and bakery products both declining. The index for food away from home rose 0.2 percent in June and has risen 2.2 percent over the past 12 months.


The energy index increased 1.6 percent in June, its third increase in a row and largest since December. The gasoline index rose for the third month in a row, increasing 3.3 percent. (Before seasonal adjustment, gasoline prices increased 0.3 percent.) The electricity index also increased in June, rising 0.2 percent. In contrast, the fuel oil index fell 1.7 percent, its fourth consecutive decline. The index for natural gas also decreased, falling 2.6 percent. Over the past 12 months, the energy index has increased 3.2 percent, with its major components increasing from a low of 2.0 percent (gasoline) to a high of 5.1 percent (natural gas).

All items less food and energy

The index for all items less food and energy increased 0.1 percent in June after a 0.3 percent increase in May. The shelter index decelerated, increasing 0.2 percent in June after a 0.3 percent increase the prior month. The indexes for rent and owners’ equivalent rent repeated their May increases of 0.3 percent and 0.2 percent, respectively. However, the index for lodging away from home turned down in June, falling 1.9 percent after rising 2.0 percent in May. The apparel index rose 0.5 percent in June, its largest increase since last July. The medical care index rose 0.1 percent in June; the index for medical care services was unchanged, but the index for prescription drugs increased 1.0 percent. The index for household furnishings and operations rose 0.2 percent in June, its first increase since June 2013. The index for airline fares, which rose 5.8 percent in May, increased 0.4 percent in June. The tobacco index also rose, increasing 1.0 percent, and the recreation index advanced 0.1 percent. In contrast, the new vehicles index fell in June; its 0.3 percent decrease was its first decline since January. The index for used cars and trucks also decreased, declining 0.4 percent.

The index for all items less food and energy has risen 1.9 percent over the last 12 months; this is slightly lower than the 2.0 percent figure in May, but higher than the 1.7 percent average annualized increase over the past five years. The shelter index has increased 2.8 percent over the last 12 months, while the medical care index has risen 2.6 percent. The index for new vehicles was unchanged over the span.